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V1495-19 21 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

60% reduction in net income may apply if the property is effectively used as a residence

A loft owner with a commercial cadastral designation asks whether they can apply the 60% reduction in Personal Income Tax (IRPF) by leasing it as a residence. The Directorate General for Taxes (DGT) rules that the reduction depends on the actual use of the property rather than its cadastral classification.

The question raised

Whether the 60 percent reduction of the net income provided for in Article 23.2 of the Tax Law is applicable.

The DGT's ruling

The 60% reduction of the net income provided for in Article 23.2 of the Personal Income Tax Law applies when the lease concerns a habitable building whose primary purpose is to satisfy the permanent housing need of the lessee. Therefore, the reduction is conditional upon the effective use of the property as a residence, regardless of its use in the cadastre.

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